The Foreign Investor’s Chamber of Commerce and Industry (FICCI) has expressed some concerns about the proposed national budget for the fiscal year 2022-23 along with its probable implication for the business and foreign investments in Bangladesh. At a media briefing held in a city hotel on Wednesday, a potentially business-friendly budget will unravel the benefits unless some of the provisions such as Workers’ Profit Participation Fund (WPPF) are reversed. FICCI President and Chief Executive Officer (CEO) OF Standard Chartered Bank Naser Ezaz Bijoy presided over the event. Among others, Rupali Chowdhury, Advisor, FICCI Advisory committee and Managing Director, Berger Paints; Zaved Akhtar, Director, FICCI, Managing Director & CEO, Unilever Bangladesh Ltd.; Shehzad Munim, advisor, FICCI advisory panel and MD, British American Tobacco Bangladesh Co. Ltd; Deepal Abeywickrema, Director, FICCI & Chairman, FICCI Tariff, Taxation and Regulatory Affairs Committee and Managing Director, Nestle Bangladesh Ltd.; Sazzad Rahim Chowdhury, Coordinator- Tariff, Taxation and Regulatory Affairs Committee and CFO, Berger Paints Bangladesh Ltd were present in the event. The programme was hosted by Executive Director of FICCI.T. I. M. Nurul Kabir. The proposed Finance Bill incorporated a provision by which a company will have to pay tax on its contribution to the Workers’ Profit Participation Fund (WPPF), which will ultimately increase the income tax burden of the companies and similarly increase the effective tax rate, said the chamber body. It said contribution to WPPF has been proposed as inadmissible expenses based on the idea that it is an apportionment of profit from after-tax profit like a dividend, while the fact is, it is a statutory payment for the benefit of the employees, which is paid from pre-tax profit as per the law. Read: Budget FY23: Lower allocation for key mega projects worries FICCI FICCI has also recommended a few changes to the Conditional Reduction of the Corporate Tax Reduction by 2.5%. As per the Finance Bill 2022, certain types of listed companies that have issued more than 10% of their shares through IPO will be able to enjoy the reduced tax rate. FICCI proposes that this provision should be amended by clearly mentioning at least 10% shares of a listed company must be held by the public in order to avail of such a reduced rate. Conditional Reduction of the Corporate Tax Reduction by 2.5% also mentioned that all receipts must be collected through banking channels. FICCI proposes that this provision should be amended and the law should allow at least 50% of the proceeds to be collected through banking channels to avail such a reduced tax rate. From next year the ceiling can be gradually increased by 10%. On the same it says, all investments and expenses in excess of Tk. 12 lac must be paid through the banking channels. FICCI proposes that section 30 of the ITO, 1984 should be amended to remove the contradiction and NBR should allow at least 10% of the expenses of corporate to be paid through the non-banking channel to avail such a reduced tax rate.

An amount of Tk 28,781 crore has been proposed for the Public Security and Security Service divisions under the Home Ministry in the proposed budget for fiscal year 2022-23, up by Tk 1893 crore, from the outgoing fiscal year 2021-22. Finance Minister AHM Mustafa Kamal announced the proposed budget while addressing budget speech in the National Parliament today (Thursday). Of the total allocation, Tk 24,594 crore has been allocated for the Public Security division, while the remaining Tk 4,187 crore for the Security Service division. These allocations include important state agencies providing security and emergency services such as the police, the Fire Service, etc.

The Centre for Policy Dialogue (CPD) has urged the government to prepare a realistic budget with a clear implementation pathway for the upcoming fiscal year 2022-23. The CPD, a think tank and research organization, also gave some recommendations for the budget focusing on the country’s graduation to a developing economy by 2026, budget implementation structure strengthening and budget allocation based on risk factors and their recovery plan. Also read:Food prices much higher in Bangladesh than global markets: CPD study The CPD disclosed its budget recommendation at a press conference, held at CPD’s office in Dhanmondi on Tuesday. Dr. Fahmida Khatun, CPD’s Executive Director, read out the budget proposals, while professor Mustafizur Rahman, distinguish fellow of CPD, Khondaker Golam Moazzem, research director and Towfiqul Islam Khan, senior research fellow, replied to queries from reporters about the recommendations. The CPD stressed on reforming the overall tax-revenue sector both in technological advancement and institutional capability and set a unified tax system along with justifying tax exemption facilities. After graduation, Bangladesh will face a challenge on imposing import duty, which is needed to adjust in the revenue earning plan in line with the post-LDC situation. The CPD urged more transparency, institutional accountability in public expenditure along with in general accessibility in the data of public expenditure to ensure good governance. Export incentive sector needs to reform with a unified system so that the real eligible sector can only get the incentives. The CPD urged to increase budget expenditure in education, agriculture sector, children and women health development to build a healthy and developed nation by 2030. The budget recommendations have also focused on increasing allocation for social safety nets in phases for pandemic recovery and global impact of food price hike. The recommendations said that the marginal people are very much suffering due to the pandemic, while food inflation pushing price hike makes their life miserable further. Also read: Budget implementation failure lack of available data: CPD The fixed income group and marginal people would face nutrition problems if the food becomes costlier as their income was affected by the pandemic and it is not resilient so far. The budget needs to set incentives for marginal people in different shapes like subsidies in food prices. The think tank proposed a stable exchange rate of Bangladesh Taka with US dollar as it impacted both the price hike of commodities in the domestic market and increased the price of industrial production cost. Appreciating the government strategy of pandemic recovery, CPD said the government policy is right but implementation is complex and sometimes delay the process of distribution.

The allocation of money for salaries and allowances of the public sector will see an uptrend from the next fiscal after a span of four years.  The government is going to allocate some 12.2% of the total budget in the upcoming fiscal of 2021-22 for salaries and allowances to the public servants and other related pockets. The allocation of this sector will be 12.5% in 2022-23 fiscal of the total budget, according to an official document. Read BSMMU announces Tk 602.73cr budget for FY 2020-21 The estimated amount of money for the next two fiscals would be Tk 745.3 billion and Tk 869.8 billion respectively. After the 2016-17 fiscal, the amount of spending in salaries and allowances for the public servants, as a proportion of the budget witnessed a downward slide. In 2016-17 fiscal the allocation was 18.2% while it nosedived to 14.8% in 2017-18 fiscal. The allocated amount for the 2016-17 fiscal was Tk 490.43 billion whereas the allocation reduced to Tk 478.5 billion in the following fiscal. As per the document, the allocation in 2013-14 fiscal was Tk 263.94 billion (14%) and Tk 288.20 billion (14.8%) in 2014-15. Also read: When govt allowances kick in at 90! The allocation saw a sharp rise in 2015-16 and 2016-17 fiscals with 16.7% and 18.2% of the total budget allocation. The amounts during these two fiscals for the salaries and other allowances were Tk 400.50 billion and Tk 490.43 billion. The document said that the rise in the allocation occurred due to implementation of the new pay scale for the public servants that continued for the two consecutive fiscals. The expenditure in the sector reduced to 14.8% (Tk 478.5 billion) of the budget in 2017-18 fiscal and 13.6% (Tk 534 billion) in 2018-19 fiscal. The trend continued in 2019-20 fiscal with 12.2% and in 2020-21 fiscal with 11.6%. The allocation for the fiscals were Tk 607.5 billion and Tk 650 billion respectively. Also read: All senior citizens to receive old-age allowance by 2025: Minister The official document expected that the trend of expenditure for the salaries and allowances in the coming two fiscals would be in the normal trend with 12.2% and 12.5% allocation of the total budget. The country is likely to get Tk 5933.14 billion budget for 2021-22 fiscal, Tk 253.14 billion higher than the running one, aiming to face the COVID-19 pandemic challenge for recovering the economy. Amid the coronavirus crisis, the government had taken up a comprehensive plan with four main strategies. These are: discouraging luxury expenditures, prioritising government spending that creates jobs, creating loan facilities through commercial banks at subsidised interest rate for the affected industries and businesses, and expanding the coverage of the government’s social safety net programmes. Read Budget: Prices of tobacco products up, gold down Meanwhile, the government has estimated to bring down its expenditure in current account while increasing the capital expenditure in the next 2021-22 and 2022-23 fiscals. According to an official document, the current expenditure for 2021-22 and 2022-23 fiscal has been estimated at 54.4% and 54.5% of the total budget respectively. Salaries and allowances of public servants, purchase of product and service, compensation and relocation expenses, payment of interest against foreign and domestic loans are under the segment of current expenditure. Besides, ‘food accounts’ and ‘expense for structural coordination’ are also under this expenditure. Also read 5pc increment for non-govt edu teachers, employees announced On the other hand, government funded annual development programme (ADP) and non-ADP capital expenditure are the main two items under the capital expenditure. Besides, loan and advance, development programmes from revenue budget, projects outside the ADP and non-ADP food for work programme and handover expenses are also under this expenditure.